Financial Performance - Consolidated revenues for Q3 2025 reached $1,164.7 million, a 9.0% increase year-over-year, primarily driven by the acquisition of Brigit and higher rentals and merchandise sales [6]. - Net earnings on a GAAP basis were $13.2 million, down from $30.9 million in the prior year, resulting in a net profit margin of 1.1%, a decrease of 180 basis points year-over-year [6]. - Adjusted EBITDA increased 5.7% year-over-year to $123.6 million, with an adjusted EBITDA margin of 10.6%, down 30 basis points compared to the prior year [6]. - Total revenues for Q3 2025 reached $1,164.7 million, a 8.9% increase from $1,068.9 million in Q3 2024 [28]. - Gross profit for Q3 2025 was $563.1 million, compared to $511.1 million in Q3 2024, reflecting a gross margin improvement [28]. - The company reported a net earnings of $13.2 million for Q3 2025, down from $30.9 million in Q3 2024, resulting in a diluted earnings per share of $0.22 [28]. - The company reported a total revenue increase of 5% compared to the previous quarter, reflecting strong operational performance [39]. - For the three months ended September 30, 2025, the consolidated net earnings (loss) were $(112,769) thousand, resulting in an operating profit (loss) of $(73,237) thousand [48]. - Adjusted EBITDA for the same period was $123,561 thousand, with Acima contributing $75,002 thousand and Rent-A-Center contributing $74,709 thousand [48]. Segment Performance - Acima's Gross Merchandise Volume (GMV) grew 11.0% year-over-year to $484.0 million, with new merchants and an expanding direct-to-consumer marketplace contributing significantly to this growth [7]. - Brigit segment revenue increased over 40% year-over-year, with paying subscribers rising approximately 27% year-over-year to 1.44 million [7]. - The Rent-A-Center segment reported a revenue decline of 4.7% year-over-year to $461.1 million, with same store sales decreasing 3.6% year-over-year [7]. - The Acima segment generated revenues of $625.3 million in Q3 2025, up from $566.2 million in Q3 2024 [28]. Guidance and Future Outlook - The company tightened its FY 2025 guidance, maintaining revenue expectations of $4.60 - $4.75 billion while adjusting adjusted EBITDA guidance to $500 - $510 million [10]. - Future guidance indicates an expected revenue growth of 10% for the upcoming quarter, driven by new product launches and market expansion strategies [39]. - The company is committed to responsible growth as it enters 2026, reflecting its updated FY 2025 guidance [13]. Liquidity and Debt - The company ended the quarter with liquidity of over $360 million and a net leverage ratio of 2.9x, down from 3.0x in the previous quarter [12]. - Cash and cash equivalents increased to $107.0 million as of September 30, 2025, up from $85.1 million a year earlier [30]. - The company’s senior debt increased to $1,102.7 million as of September 30, 2025, from $794.3 million a year earlier [30]. - The net leverage ratio as of Q3 2025 was 2.9x, with outstanding debt of $1,564,000,000 and net debt of $1,457,000,000 [76]. Expenses and Legal Matters - Operating expenses increased to $510.3 million in Q3 2025, compared to $441.0 million in Q3 2024, primarily due to higher non-labor operating expenses [28]. - Legal matters incurred expenses of $32.5 million in the three months ended June 30, 2025, significantly affecting the operating profit [39]. - The company recognized $10.0 million in legal accruals and $0.6 million in litigation expenses related to regulatory lawsuits [61]. - Legal matters expenses totaled $12,612 thousand, primarily related to regulatory investigations and lawsuits [50]. Acquisitions - The company acquired Brigit on January 31, 2025, which is expected to enhance its financial service offerings [25]. - The acquisition of Brigit is expected to contribute an additional $20 million in revenue over the next year, enhancing market presence [39]. - The company reported $6,218 thousand in transaction costs associated with the Brigit acquisition [64]. - The company incurred $3,656,000 in transaction fees related to the Brigit acquisition [67].

Core Viewpoint - Upbound Group, Inc. is set to report its financial results for Q3 2025 on October 30, 2025, before market opening, followed by a conference call to discuss the results [1] Financial Reporting - The financial results will be announced before the market opens on October 30, 2025 [1] - A conference call is scheduled to begin at 9:00 a.m. ET to discuss the financial results [1]

Group 1 - Upbound Group, Inc. (NASDAQ:UPBD) provides lease-to-own and installment purchase options for household goods, including furniture, appliances, electronics, computers, and smartphones [1] - The company announced a quarterly dividend of $0.39 per share on September 18, payable by October 21 to shareholders of record on September 30, resulting in a yield of 7.1% [1] - Jim Cramer expressed skepticism about UPBD's business model, stating it is the least known and has not been proven [1] Group 2 - There is a belief that certain AI stocks may offer greater upside potential and carry less downside risk compared to UPBD [2]

Group 1: Remitly Global, Inc. - Jim Cramer expressed a negative outlook on Remitly Global, preferring traditional banks over this company [1] - JMP Securities analyst David M. Scharf maintained a Market Outperform rating for Remitly Global but lowered the price target from $32 to $23 [1] - Remitly shares fell 2% to settle at $15.72 on Monday [4] Group 2: Upbound Group, Inc. - Jim Cramer also expressed disapproval of Upbound Group [1] - Upbound Group declared a quarterly cash dividend of 39 cents per share for the fourth quarter [1] - Upbound Group shares declined 3.1% to settle at $22.03 on Monday [4] Group 3: USA Rare Earth, Inc. - Jim Cramer noted that USA Rare Earth fits a speculative pattern, with potential interest from the president for a stake [2] - CEO Barbara Humpton mentioned that the company is in regular talks with the White House, indicating possible deal speculation [2] - USA Rare Earth shares gained 1.4% to settle at $26.32 [4]

Core Insights - Upbound Group (UPBD) shares increased by 8.2% to $27.07 in the last trading session, with a notable trading volume, compared to a 7.5% gain over the past four weeks [1] Group 1: Company Performance - Upbound Group is experiencing strong momentum in its Acima segment, driven by consistent marketplace growth and disciplined underwriting, leading to improved efficiency and revenue expansion [2] - The Brigit acquisition is strategically beneficial, providing a scalable fintech platform with high margins and robust user growth, enhancing Upbound's digital capabilities [2] - The company is expected to report quarterly earnings of $1.01 per share, reflecting a year-over-year increase of 6.3%, with revenues projected at $1.14 billion, up 7% from the previous year [3] Group 2: Earnings Estimates and Stock Trends - Trends in earnings estimate revisions are closely linked to short-term stock price movements, indicating potential strength in stock performance [4] - The consensus EPS estimate for Upbound Group has remained unchanged over the last 30 days, suggesting that stock price increases may not be sustainable without earnings estimate revisions [5] - Upbound Group holds a Zacks Rank of 3 (Hold), indicating a neutral outlook, while another company in the leasing industry, McGrath (MGRC), has a Zacks Rank of 2 (Buy) [5][6]

Group 1 - GameStop's stock surged 10% this week due to strong quarterly results that exceeded expectations, driven by increased demand for hardware and collectibles [2] - Upbound Group shows stronger revenue growth, better profitability, and a lower valuation compared to GameStop, suggesting it may be a more compelling investment opportunity [2] - GameStop operates 4,573 stores across multiple regions, while Upbound operates about 1,846 locations, providing lease-to-own options for household durable goods [3] Group 2 - Upbound's quarterly revenue growth was 7.5%, while GameStop's was -16.9%, indicating a significant performance gap [7] - Over the last 12 months, Upbound's revenue growth remained at 7.5%, compared to GameStop's -25.3%, further highlighting Upbound's stronger performance [7] - Upbound leads in profitability with a Last 12 Months' margin of 5.9% and a 3-year average of 5.1%, outperforming GameStop [7]

Form 10-Q Cover Page [Form 10-Q Cover Page](index=1&type=section&id=Form%2010-Q) This section identifies the filing as a Quarterly Report on Form 10-Q for Upbound Group, Inc. for the period ended June 30, 2025, indicating its status as a large accelerated filer with 57,895,609 common shares outstanding as of July 24, 2025 - Filing is a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) - Registrant, Upbound Group, Inc., is a large accelerated filer[4](index=4&type=chunk)[5](index=5&type=chunk) Class | Outstanding Shares (as of July 24, 2025) | :--- | :--- | | Common stock, $.01 par value | 57,895,609 | Table of Contents [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) This section provides an overview of the report's structure, listing Part I (Financial Information) and Part II (Other Information) and their respective items, along with their corresponding page numbers - The table of contents outlines the report into two main parts: Financial Information (Part I) and Other Information (Part II)[7](index=7&type=chunk) Part I. Financial Information [Part I. Financial Information](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's condensed consolidated financial statements, including statements of operations, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes. It also includes management's discussion and analysis of financial condition and results of operations, quantitative and qualitative disclosures about market risk, and controls and procedures [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section provides the unaudited condensed consolidated financial statements for Upbound Group, Inc. and its subsidiaries, covering the statements of operations, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed explanatory notes [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2025, Upbound Group, Inc. reported a decrease in net earnings and diluted EPS compared to the prior year, despite an increase in total revenues. This was primarily driven by higher operating expenses, particularly other gains and charges Three Months Ended June 30, 2025 vs. 2024 (in thousands, except per share data) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,157,536 | $1,076,510 | $81,026 | 7.5% | | Gross Profit | $571,825 | $531,959 | $39,866 | 7.5% | | Operating Profit | $50,734 | $80,655 | $(29,921) | (37.1)% | | Net Earnings | $15,485 | $33,949 | $(18,464) | (54.4)% | | Diluted EPS | $0.26 | $0.61 | $(0.35) | (57.4)% | Six Months Ended June 30, 2025 vs. 2024 (in thousands, except per share data) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,333,899 | $2,172,477 | $161,422 | 7.4% | | Gross Profit | $1,121,954 | $1,061,027 | $60,927 | 5.7% | | Operating Profit | $113,349 | $142,417 | $(29,068) | (20.4)% | | Net Earnings | $40,278 | $61,636 | $(21,358) | (34.7)% | | Diluted EPS | $0.69 | $1.10 | $(0.41) | (37.3)% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three and six months ended June 30, 2025, decreased compared to the prior year, primarily due to lower net earnings, despite positive foreign currency translation adjustments in 2025 contrasting with losses in 2024 Three Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Net Earnings | $15,485 | $33,949 | $(18,464) | | Foreign currency translation adjustments, net of tax | $2,434 | $(3,839) | $6,273 | | Comprehensive Income | $17,919 | $30,110 | $(12,191) | Six Months Ended June 30, 2025 vs. 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Net Earnings | $40,278 | $61,636 | $(21,358) | | Foreign currency translation adjustments, net of tax | $2,357 | $(3,163) | $5,520 | | Comprehensive Income | $42,635 | $58,473 | $(15,838) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased significantly to $3.095 billion from $2.650 billion at December 31, 2024, primarily driven by increases in cash, receivables, property assets, goodwill, and other intangible assets. Total liabilities also rose, mainly due to increased senior debt and accrued liabilities Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $106,841 | $60,860 | $45,981 | 75.6% | | Total assets | $3,095,440 | $2,649,662 | $445,778 | 16.8% | | Total liabilities | $2,409,892 | $2,020,678 | $389,214 | 19.3% | | Total stockholders' equity | $685,548 | $628,984 | $56,564 | 9.0% | - Significant increases in assets include receivables (net), property assets (net), goodwill, and other intangible assets, largely influenced by the Brigit acquisition[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) For the six months ended June 30, 2025, total stockholders' equity increased to $685.5 million from $629.0 million at December 31, 2024. This increase was primarily driven by the Brigit acquisition equity consideration and stock-based compensation, partially offset by dividends declared Stockholders' Equity Changes (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :--- | :--- | | Balance at December 31, 2024 | $628,984 | | Net earnings | $40,278 | | Brigit acquisition equity consideration | $41,057 | | Stock-based compensation | $24,675 | | Dividends declared | $(45,221) | | Balance at June 30, 2025 | $685,548 | - Cash dividends declared for the six months ended June 30, 2025, were **$0.78 per common share**, up from **$0.74** in the prior year[16](index=16&type=chunk)[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $145.6 million from $60.5 million in the prior year. Cash used in investing activities rose sharply to $304.9 million due to the Brigit acquisition, while cash provided by financing activities turned positive at $204.6 million, driven by increased debt proceeds Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $145,550 | $60,461 | $85,089 | | Net cash used in investing activities | $(304,942) | $(26,104) | $(278,838) | | Net cash provided by (used in) financing activities | $204,597 | $(44,315) | $248,912 | | Net increase (decrease) in cash and cash equivalents | $45,981 | $(11,190) | $57,171 | - The significant increase in cash used in investing activities was primarily due to the Brigit acquisition, which involved **$276.2 million** in cash consideration[23](index=23&type=chunk)[202](index=202&type=chunk) - Financing activities were positively impacted by **$549.0 million** in proceeds from debt, primarily from the ABL Credit Facility to fund the Brigit acquisition[23](index=23&type=chunk)[204](index=204&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the condensed consolidated financial statements, covering accounting policies, significant transactions like the Brigit acquisition, revenue recognition, receivables, debt, equity, segment information, and legal contingencies [Note 1 - Basis of Presentation](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation) This note outlines the basis for preparing the unaudited interim financial statements, confirming compliance with SEC rules, the use of estimates, and the principles of consolidation. It also details the company's four operating segments: Acima, Rent-A-Center, Brigit (newly established after January 31, 2025 acquisition), and Mexico, and mentions the adoption of ASU 2023-09 for income tax disclosures starting January 1, 2025 - Interim financial statements are unaudited, prepared according to SEC rules, and involve estimates and assumptions[25](index=25&type=chunk)[27](index=27&type=chunk) - The Company reports four operating segments: Acima, Rent-A-Center, Brigit, and Mexico. The Brigit segment was established following its acquisition on January 31, 2025, and the Franchising segment was combined with Rent-A-Center[28](index=28&type=chunk)[29](index=29&type=chunk) - ASU 2023-09 (Income Taxes) is required for adoption beginning January 1, 2025, with disclosures in annual and subsequent interim reports[35](index=35&type=chunk) [Note 2 - Acquisitions](index=10&type=section&id=Note%202%20-%20Acquisitions) This note details the acquisition of Brigit on January 31, 2025, for approximately $395.4 million, comprising stock, cash, and deferred consideration. The acquisition aims to accelerate Upbound's strategy in financial health technology. The note also provides the fair values of acquired assets and assumed liabilities, including significant goodwill and intangible assets, and pro forma financial results - Upbound Group acquired Bridge IT, Inc. ("Brigit") on January 31, 2025, for approximately **$395.4 million**, consisting of stock, cash, and deferred consideration[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk)[42](index=42&type=chunk) - The acquisition is intended to accelerate Upbound's strategy to provide technology-driven financial solutions to underserved customers[36](index=36&type=chunk) Brigit Acquisition - Estimated Fair Values (January 31, 2025, in thousands) | Item | Amount | | :--- | :--- | | Total purchase consideration | $395,378 | | Total assets acquired | $462,469 | | Total liabilities assumed | $67,091 | | Net assets acquired | $395,378 | | Goodwill | $196,866 | | Other intangible assets | $152,300 | Brigit's Contribution to Consolidated Statements of Operations (January 31, 2025 - June 30, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Total revenues | $83,751 | | Net earnings | $10,780 | [Note 3 - Revenues](index=13&type=section&id=Note%203%20-%20Revenues) This note disaggregates revenue by segment and type (rentals and fees, merchandise sales, subscriptions and fees, other) for the three and six months ended June 30, 2025 and 2024. It also details the recognition policies for lease-purchase agreements, merchandise sales, subscriptions and fees (new with Brigit), and other revenue streams like franchise royalties Consolidated Revenues by Type (Three Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Rentals and fees | $904,583 | $885,977 | $18,606 | 2.1% | | Merchandise sales | $192,217 | $182,546 | $9,671 | 5.3% | | Subscriptions and fees | $51,890 | $0 | $51,890 | N/A | | Other | $8,846 | $7,987 | $859 | 10.8% | | **Total Revenues** | **$1,157,536** | **$1,076,510** | **$81,026** | **7.5%** | Consolidated Revenues by Type (Six Months Ended June 30, in thousands) | Revenue Type | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Rentals and fees | $1,803,795 | $1,758,516 | $45,279 | 2.6% | | Merchandise sales | $428,462 | $397,796 | $30,666 | 7.7% | | Subscriptions and fees | $83,751 | $0 | $83,751 | N/A | | Other | $17,891 | $16,165 | $1,726 | 10.7% | | **Total Revenues** | **$2,333,899** | **$2,172,477** | **$161,422** | **7.4%** | - Brigit segment contributed **$51.9 million** and **$83.8 million** in subscriptions and fees revenue for the three and six months ended June 30, 2025, respectively[49](index=49&type=chunk) - Lease-to-own agreements are accounted for as operating leases, with revenue recognized over the lease term. Subscriptions and fees revenue (Brigit) is recognized ratably over the monthly contract period[51](index=51&type=chunk)[57](index=57&type=chunk) [Note 4 - Receivables and Allowance for Doubtful Accounts](index=15&type=section&id=Note%204%20-%20Receivables%20and%20Allowance%20for%20Doubtful%20Accounts) This note details the composition of receivables, including trade and notes receivables, installment sales receivables, and customer cash advances (new with Brigit). It also outlines the methodologies for establishing and managing the allowance for doubtful accounts, which significantly increased to $29.6 million at June 30, 2025, from $13.3 million at December 31, 2024, primarily due to the Brigit acquisition and higher bad debt expense Receivables Composition (in thousands) | Receivable Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade and notes receivables | $103,660 | $109,486 | | Installment sales receivables | $58,384 | $60,242 | | Customer cash advances | $57,456 | $0 | | **Total receivables, net of allowance** | **$189,894** | **$156,438** | Allowance for Doubtful Accounts (in thousands) | Item | June 30, 2025 | | :--- | :--- | | Beginning allowance | $13,290 | | Bad debt expense | $36,697 | | Accounts written off, net of recoveries | $(20,381) | | **Ending allowance** | **$29,606** | - Customer cash advances are a new receivable type from the Brigit segment, with an allowance for doubtful accounts of **$5.1 million** at June 30, 2025[64](index=64&type=chunk)[69](index=69&type=chunk) [Note 5 - Income Taxes](index=16&type=section&id=Note%205%20-%20Income%20Taxes) The effective tax rate for the six months ended June 30, 2025, increased to 31.0% from 22.0% in the prior year, primarily due to non-deductible expenses related to the Brigit acquisition and the absence of a favorable foreign deferred tax asset adjustment seen in 2024. The company is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBB) on future financial statements - Effective tax rate increased to **31.0%** for the six months ended June 30, 2025, from **22.0%** in 2024[70](index=70&type=chunk) - The increase is primarily due to non-deductible expenses from the Brigit acquisition and a non-recurring favorable foreign deferred tax asset adjustment in 2024[70](index=70&type=chunk) - The company is evaluating the impact of the One Big Beautiful Bill Act (OBBB), signed July 4, 2025, which includes **100% bonus depreciation** and immediate R&D expensing[71](index=71&type=chunk) [Note 6 - Senior Debt](index=16&type=section&id=Note%206%20-%20Senior%20Debt) This note details the company's senior debt, including the $550 million ABL Credit Facility (maturing June 2029) and the $875 million Term Loan Facility (maturing February 2028). Both facilities bear interest at fluctuating rates tied to Term SOFR. Recent amendments in 2024 repriced the Term Loan Facility and extended the ABL Credit Facility's maturity. As of June 30, 2025, $334.0 million was outstanding under the ABL and $798.0 million under the Term Loan - The company has a **$550 million** ABL Credit Facility (matures June 7, 2029) and an **$875 million** Term Loan Facility (matures February 17, 2028)[72](index=72&type=chunk)[77](index=77&type=chunk)[87](index=87&type=chunk) - Both facilities bear interest at fluctuating rates referenced to Term SOFR. The Term Loan Facility's applicable margin was reduced by **50 basis points** to **2.75%** in May 2024[75](index=75&type=chunk)[82](index=82&type=chunk)[88](index=88&type=chunk) Outstanding Senior Debt (June 30, 2025, in thousands) | Facility | Amount Outstanding | Total Interest Rate (June 30, 2025) | | :--- | :--- | :--- | | ABL Credit Facility | $334,000 | 6.39% | | Term Loan Facility | $798,000 | 7.03% | | **Total Senior Debt** | **$1,132,000** | | - The company was in compliance with all ABL Credit Facility covenants as of June 30, 2025[86](index=86&type=chunk) [Note 7 - Senior Notes](index=19&type=section&id=Note%207%20-%20Senior%20Notes) This note describes the $450 million in senior unsecured notes issued on February 17, 2021, due February 15, 2029, bearing interest at 6.375%. These notes are effectively subordinated to secured debt and guaranteed by certain domestic subsidiaries. The indenture contains covenants that limit the company's ability to incur debt, pay dividends, and make other restricted payments, with certain suspensions if investment grade ratings are achieved - **$450 million** in senior unsecured notes were issued on February 17, 2021, due February 15, 2029, with a **6.375%** interest rate[92](index=92&type=chunk) - The notes are effectively subordinated to secured indebtedness and guaranteed by certain domestic subsidiaries[94](index=94&type=chunk) - Covenants limit actions like creating liens, transferring assets, incurring indebtedness, and paying dividends, with potential suspension if investment grade ratings are achieved[95](index=95&type=chunk) [Note 8 - Fair Value](index=19&type=section&id=Note%208%20-%20Fair%20Value) This note discusses the fair value hierarchy and the valuation of financial instruments. Cash, receivables, payables, and variable-rate debt (Term Loan and ABL Credit Facility) are carried at amounts approximating fair value due to their short maturities or variable interest rates. The fair value of the fixed-rate senior notes was $442.3 million at June 30, 2025, compared to a carrying value of $450.0 million - Cash, receivables, payables, and variable-rate senior debt (Term Loan and ABL Credit Facility) are carried at amounts approximating fair value[98](index=98&type=chunk) Senior Notes Fair Value (June 30, 2025, in thousands) | Item | Carrying Value | Fair Value | Difference | | :--- | :--- | :--- | :--- | | Senior notes | $450,000 | $442,260 | $(7,740) | [Note 9 - Other Gains and Charges](index=20&type=section&id=Note%209%20-%20Other%20Gains%20and%20Charges) This note details significant non-recurring or unusual gains and charges impacting the financial statements. For the six months ended June 30, 2025, these included substantial legal accruals ($41.7 million), Brigit acquisition-related expenses ($33.0 million for depreciation, amortization, stock compensation, and transaction costs), and Acima acquired assets depreciation/amortization ($29.8 million) Other Gains and Charges (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | Change ($) | | :--- | :--- | :--- | :--- | | Legal matters | $43,161 | $700 | $42,461 | | Acima acquired assets depreciation and amortization | $29,800 | $31,546 | $(1,746) | | Brigit equity consideration vesting | $10,464 | $0 | $10,464 | | Brigit acquired assets depreciation and amortization | $10,360 | $0 | $10,360 | | Brigit replacement awards and other compensation | $6,072 | $0 | $6,072 | | Brigit transaction costs | $6,109 | $0 | $6,109 | | **Total other gains and charges** | **$108,759** | **$51,718** | **$57,041** | - Legal accruals for the six months ended June 30, 2025, increased significantly to **$41.7 million**, primarily related to the New York Attorney General and multi-state matters[105](index=105&type=chunk) - Brigit acquisition-related expenses include stock compensation, depreciation/amortization of acquired assets, and transaction costs, totaling **$33.0 million** for the six months ended June 30, 2025[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) [Note 10 - Segment Information](index=21&type=section&id=Note%2010%20-%20Segment%20Information) This note provides disaggregated financial information for the company's four operating segments: Acima, Rent-A-Center, Brigit, and Mexico. It details revenues, gross profit, operating labor, non-labor operating expenses, depreciation and amortization, operating profit, capital expenditures, and assets by segment for the three and six months ended June 30, 2025 and 2024 - The company operates four segments: Acima, Rent-A-Center, Brigit (newly established Jan 31, 2025), and Mexico[110](index=110&type=chunk) Total Revenues by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Acima | $1,256,254 | $1,114,140 | $142,114 | 12.8% | | Rent-A-Center | $956,143 | $1,016,902 | $(60,759) | (6.0)% | | Brigit | $83,751 | $0 | $83,751 | N/A | | Mexico | $37,751 | $41,435 | $(3,684) | (8.9)% | | **Total Revenues** | **$2,333,899** | **$2,172,477** | **$161,422** | **7.4%** | Operating Profit by Segment (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Acima | $155,711 | $121,902 | $33,809 | 27.7% | | Rent-A-Center | $129,416 | $149,700 | $(20,284) | (13.5)% | | Brigit | $19,301 | $0 | $19,301 | N/A | | Mexico | $3,159 | $3,255 | $(96) | (2.9)% | | Corporate | $(194,238) | $(132,440) | $(61,798) | (46.7)% | | **Total Operating Profit** | **$113,349** | **$142,417** | **$(29,068)** | **(20.4)%** | Total Assets by Segment (June 30, 2025 vs. December 31, 2024, in thousands) | Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Acima | $1,266,440 | $1,301,657 | | Rent-A-Center | $921,415 | $977,787 | | Brigit | $434,618 | $0 | | Mexico | $53,337 | $47,608 | | Corporate | $419,630 | $322,610 | | **Total Assets** | **$3,095,440** | **$2,649,662** | [Note 11 - Common Stock and Stock-Based Compensation](index=24&type=section&id=Note%2011%20-%20Common%20Stock%20and%20Stock-Based%20Compensation) This note details the company's stock repurchase program, with $235.0 million remaining available at June 30, 2025, and stock-based compensation. For the six months ended June 30, 2025, $12.6 million in stock compensation expense was recognized, including $10.5 million related to Brigit acquisition equity consideration vesting - Approximately **$235.0 million** remains available for repurchases under the stock repurchase program as of June 30, 2025. No repurchases were made in the first six months of 2025 or 2024[115](index=115&type=chunk) Stock-Based Compensation Expense (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Total stock-based compensation expense | $12,600 | $13,400 | | Brigit acquisition equity consideration vesting | $10,500 | $0 | | Acima Holdings acquisition equity consideration vesting | $0 | $4,900 | | Accelerated stock compensation (former CEO) | $1,600 | $1,700 | [Note 12 - Contingencies](index=25&type=section&id=Note%2012%20-%20Contingencies) This note discusses various legal proceedings and governmental inquiries, including a multi-state Attorneys' General investigation and a New York Attorney General lawsuit against Acima, both related to lease-to-own transactions. It also mentions the McBurnie class action lawsuit, which reached an agreement in principle to settle for $14.0 million in July 2025, and a patent infringement lawsuit by FlexShopper against Acima. Estimated legal accruals increased to $52.4 million at June 30, 2025, from $20.7 million at December 31, 2024 - The company is involved in a multi-state Attorneys' General investigation and a New York Attorney General lawsuit concerning Acima's lease-to-own practices[124](index=124&type=chunk)[128](index=128&type=chunk) - The McBurnie class action lawsuit, related to processing and expedited fees, reached an agreement in principle to settle for **$14.0 million** in July 2025[129](index=129&type=chunk) - FlexShopper, Inc. filed a patent infringement lawsuit against Upbound Group and its Acima subsidiaries in September 2024[130](index=130&type=chunk) Estimated Legal Accruals (in thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $52,400 | | December 31, 2024 | $20,700 | [Note 13 - Earnings Per Common Share](index=27&type=section&id=Note%2013%20-%20Earnings%20Per%20Common%20Share) This note provides the calculation of basic and diluted earnings per common share. For the six months ended June 30, 2025, diluted EPS was $0.69, based on 58.5 million weighted-average dilutive shares, which includes approximately 1.3 million common shares from the Brigit acquisition subject to vesting conditions Earnings Per Common Share (Six Months Ended June 30, in thousands, except per share data) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net earnings | $40,278 | $61,636 | | Weighted-average shares outstanding | 56,238 | 54,597 | | Effect of dilutive stock awards | 2,273 | 1,231 | | Weighted-average dilutive shares | 58,511 | 55,828 | | Basic earnings per common share | $0.72 | $1.13 | | Diluted earnings per common share | $0.69 | $1.10 | - Weighted-average dilutive shares for the six months ended June 30, 2025, include approximately **1.3 million common shares** from the Brigit acquisition subject to vesting conditions[132](index=132&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of Upbound Group's financial performance and condition, discussing revenues, expenses, segment results, and liquidity for the three and six months ended June 30, 2025, compared to the prior year. It also includes forward-looking statements, business strategy, recent developments, and operational trends [Cautionary Note Regarding Forward-Looking Statements](index=28&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section advises readers that the report contains forward-looking statements, which are not guarantees of future events and are subject to various risks and uncertainties. It lists numerous factors that could cause actual results to differ materially, including macroeconomic conditions, integration challenges from the Brigit acquisition, and regulatory risks - Forward-looking statements are identified by words like "believes," "expects," "anticipates," and are not predictions or guarantees of future events[134](index=134&type=chunk)[135](index=135&type=chunk) - Key risks include difficulties integrating Brigit, macroeconomic conditions (inflation, interest rates, consumer spending), changes in credit ratings, managing multiple business segments, and litigation/regulatory proceedings[135](index=135&type=chunk)[136](index=136&type=chunk) [Our Business](index=30&type=section&id=Our%20Business) Upbound Group, Inc. is a technology and data-driven leader in accessible financial solutions for underserved consumers. Through its Acima and Rent-A-Center segments, it provides lease-to-own durable products. The recent acquisition of Brigit on January 31, 2025, expanded its offerings into holistic financial health technology - Upbound Group is a technology and data-driven leader in accessible financial solutions for underserved consumers[138](index=138&type=chunk) - Acima and Rent-A-Center segments offer lease-to-own durable products in the US, Puerto Rico, and Mexico[138](index=138&type=chunk) - The Brigit acquisition (January 31, 2025) expanded offerings to financial health products like budgeting, earned wage access, credit building, and identity theft protection[139](index=139&type=chunk) [Executive Summary](index=30&type=section&id=Executive%20Summary) The executive summary outlines Upbound Group's strategy to leverage data analytics, upgrade technology, expand market opportunities in lease-to-own and complementary financial products, and develop centers of excellence. Recent developments include the signing of the OBBB tax act and a quarterly cash dividend of $0.39 per share. Macroeconomic conditions continue to impact business and operational trends [Our Strategy](index=30&type=section&id=Our%20Strategy) Upbound Group's strategy centers on enhancing financial opportunity for underserved consumers by leveraging data analytics, integrating technology platforms for seamless customer experiences, expanding market presence in lease-to-own solutions, and developing complementary financial products. This includes growing Acima's retailer penetration and accelerating Rent-A-Center's e-commerce shift - Key strategic initiatives include leveraging data analytics, upgrading technology platforms, expanding market opportunities in lease-to-own and complementary products, and developing centers of excellence[140](index=140&type=chunk)[141](index=141&type=chunk) - Specific goals include growing Acima's third-party retailer penetration and direct-to-consumer channels, and accelerating Rent-A-Center's e-commerce shift and product category expansion[151](index=151&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) Recent developments include the signing of the One Big Beautiful Bill Act (OBBB) on July 4, 2025, which the company is evaluating for financial statement impact, and the approval of a quarterly cash dividend of $0.39 per share for Q2 2025, paid on July 8, 2025 - The One Big Beautiful Bill Act (OBBB) was signed into law on July 4, 2025, with provisions for **100% bonus depreciation** and immediate R&D expensing, currently being evaluated for financial impact[143](index=143&type=chunk) - A quarterly cash dividend of **$0.39 per share** for Q2 2025 was approved on June 3, 2025, and paid on July 8, 2025[144](index=144&type=chunk) [Business and Operational Trends](index=31&type=section&id=Business%20and%20Operational%20Trends) Macroeconomic conditions, including inflation, interest rate hikes, and supply chain disruptions, continue to significantly impact the business, affecting consumer spending, payment behaviors, and operating costs. E-commerce revenues in the Rent-A-Center segment continue to grow, representing 27% of total lease-to-own revenues for the six months ended June 30, 2025, up from 26% in 2024 - Macroeconomic conditions (inflation, interest rates, labor market, supply chain) continue to significantly impact business, operations, and consumer behavior[145](index=145&type=chunk)[146](index=146&type=chunk) - E-commerce revenues in the Rent-A-Center segment increased to approximately **27%** of total lease-to-own revenues for the six months ended June 30, 2025, from **26%** in 2024[148](index=148&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated financial performance, including key metrics, an overview of changes for the six months ended June 30, 2025, and a comparative discussion of revenues, costs, and expenses for both the three-month and six-month periods [Key Metrics](index=31&type=section&id=Key%20Metrics) This section defines key operational and financial metrics used to evaluate the company's performance, including Gross Merchandise Volume (GMV) for Acima, Lease Portfolio Value and Same Store Sales for Rent-A-Center, Lease Charge-Offs (LCOs), Brigit Paying Users, and Brigit Net Advance Losses - Gross Merchandise Volume (GMV) measures the retail value of merchandise leased by Acima, net of estimated cancellations[150](index=150&type=chunk) - Lease Portfolio Value and Same Store Lease Portfolio Value track expected monthly rental income for Rent-A-Center[152](index=152&type=chunk)[153](index=153&type=chunk) - Lease Charge-Offs (LCOs) represent charge-offs of unrecoverable on-rent merchandise. Brigit Paying Users and Brigit Net Advance Losses track user engagement and uncollectible cash advances for the Brigit segment[155](index=155&type=chunk)[156](index=156&type=chunk) [Overview](index=32&type=section&id=Overview) For the six months ended June 30, 2025, consolidated revenues increased by $161.4 million, primarily due to the Brigit acquisition and Acima's growth, partially offset by a decline in Rent-A-Center. Operating profit decreased by $29.1 million due to higher other gains and charges, non-labor operating expenses, and G&A, despite increased gross profit Consolidated Financial Overview (Six Months Ended June 30, 2025 vs. 2024, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,333,899 | $2,172,477 | $161,422 | 7.4% | | Gross Profit | $1,121,954 | $1,061,027 | $60,927 | 5.7% | | Operating Profit | $113,349 | $142,417 | $(29,068) | (20.4)% | - Acima segment revenues increased by **$142.1 million**, driven by higher GMV from increased retailer locations and productivity[159](index=159&type=chunk) - Rent-A-Center segment revenues decreased by **$60.8 million** due to a **3.0%** decline in same-store sales[160](index=160&type=chunk) - Brigit segment contributed **$83.8 million** in revenues and **$19.3 million** in operating profit since its acquisition on January 31, 2025[161](index=161&type=chunk) [Three Months Ended June 30, 2025, compared to Three Months Ended June 30, 2024](index=33&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025%2C%20compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) For the three months ended June 30, 2025, total revenues increased by 7.5% to $1.158 billion, driven by Acima's growth and the Brigit acquisition, despite a decline in Rent-A-Center. Operating profit decreased by 37.1% to $50.7 million, primarily due to a significant increase in other gains and charges (legal matters, Brigit acquisition costs) and higher non-labor operating expenses Key Financials (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,157,536 | $1,076,510 | $81,026 | 7.5% | | Gross Profit | $571,825 | $531,959 | $39,866 | 7.5% | | Operating Profit | $50,734 | $80,655 | $(29,921) | (37.1)% | | Net Earnings | $15,485 | $33,949 | $(18,464) | (54.4)% | - Other gains and charges increased by **$40.6 million** to **$65.5 million**, driven by legal matters (**$31.8 million**) and Brigit acquisition-related expenses (**$17.5 million**)[173](index=173&type=chunk) - Operating labor decreased by **4.5%** due to reductions in Rent-A-Center and Acima segments, partially offset by Brigit[170](index=170&type=chunk) [Six Months Ended June 30, 2025, compared to Six Months Ended June 30, 2024](index=35&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%2C%20compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) For the six months ended June 30, 2025, total revenue increased by 7.4% to $2.334 billion, primarily from Acima's growth and the Brigit acquisition. Operating profit decreased by 20.4% to $113.3 million, largely due to a $57.1 million increase in other gains and charges (legal matters, Brigit acquisition costs) and higher non-labor operating expenses, partially offset by increased gross profit and lower operating labor Key Financials (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,333,899 | $2,172,477 | $161,422 | 7.4% | | Gross Profit | $1,121,954 | $1,061,027 | $60,927 | 5.7% | | Operating Profit | $113,349 | $142,417 | $(29,068) | (20.4)% | | Net Earnings | $40,278 | $61,636 | $(21,358) | (34.7)% | - Other gains and charges increased by **$57.1 million** to **$108.8 million**, driven by legal matters (**$42.5 million**) and Brigit acquisition-related expenses (**$33.0 million**)[184](index=184&type=chunk) - Operating labor decreased by **5.1%** due to reductions in Rent-A-Center and Acima segments[181](index=181&type=chunk) [Segment Performance](index=36&type=section&id=Segment%20Performance) This section provides a detailed breakdown of the financial performance of each of Upbound Group's four operating segments: Acima, Rent-A-Center, Brigit, and Mexico, for the three and six months ended June 30, 2025, compared to the prior year [Acima Segment Performance](index=36&type=section&id=Acima%20segment) The Acima segment reported significant revenue growth for the three and six months ended June 30, 2025, increasing by 12.0% and 12.8% respectively, driven by higher Gross Merchandise Volume (GMV) from expanded retailer locations and direct-to-consumer offerings. Operating profit also increased, with merchandise losses (LCOs) as a percentage of revenues slightly decreasing Acima Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,256,254 | $1,114,140 | $142,114 | 12.8% | | Gross profit | $381,440 | $348,913 | $32,527 | 9.3% | | Operating profit | $155,711 | $121,902 | $33,809 | 27.7% | | Gross merchandise volume (GMV) | $976,225 | $867,665 | $108,560 | 12.5% | - Revenue growth was driven by increases in rentals and fees and merchandise sales, resulting from higher GMV due to increased third-party retailer locations, productivity, and expanded direct-to-consumer offerings[187](index=187&type=chunk) - Merchandise losses (LCOs) as a percentage of revenues were approximately **9.1%** for the six months ended June 30, 2025, a slight decrease from **9.6%** in 2024[189](index=189&type=chunk) [Rent-A-Center Segment Performance](index=37&type=section&id=Rent-A-Center%20segment) The Rent-A-Center segment experienced revenue declines for both the three and six months ended June 30, 2025, decreasing by 7.1% and 6.0% respectively, primarily due to a decrease in same-store sales. Operating profit also decreased, with merchandise losses (LCOs) as a percentage of lease-to-own revenues slightly increasing Rent-A-Center Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $956,143 | $1,016,902 | $(60,759) | (6.0)% | | Gross profit | $639,784 | $682,387 | $(42,603) | (6.2)% | | Operating profit | $129,416 | $149,700 | $(20,284) | (13.5)% | | Change in same store revenue | -3.0% | N/A | N/A | N/A | - Revenue decrease was primarily due to a **3.0%** decrease in same-store sales for the six months ended June 30, 2025[190](index=190&type=chunk) - Operating profit margin decreased due to higher general and administrative expenses, primarily from increased allowance for doubtful accounts related to franchising trade receivables[192](index=192&type=chunk) - Merchandise losses (LCOs) as a percentage of lease-to-own revenues were approximately **4.7%** for the six months ended June 30, 2025, up from **4.5%** in 2024[192](index=192&type=chunk) [Brigit Segment Performance](index=37&type=section&id=Brigit%20segment) The Brigit segment, acquired on January 31, 2025, generated $83.8 million in revenues and $19.3 million in operating profit for the six months ended June 30, 2025. Subscription revenue was the largest component, followed by transfer fees and marketplace revenue. The segment reported a gross profit margin of 88.1% and an operating profit margin of 23.0% Brigit Segment Performance (Six Months Ended June 30, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Revenues | $83,751 | | Gross profit | $73,759 | | Operating profit | $19,301 | | Brigit paying users | 1,320,272 | - Revenues included **$60.3 million** in subscription revenue, **$16.6 million** in transfer fee revenue, and **$6.8 million** in marketplace revenue for the six months ended June 30, 2025[193](index=193&type=chunk) - Gross profit as a percentage of segment revenues was **88.1%**, and operating profit as a percentage of segment revenues was **23.0%** for the six months ended June 30, 2025[194](index=194&type=chunk) [Mexico Segment Performance](index=38&type=section&id=Mexico%20segment) The Mexico segment experienced revenue and gross profit declines for the three and six months ended June 30, 2025, primarily due to negative exchange rate fluctuations. On a constant currency basis, revenues and gross profit would have increased. Operating profit margin improved to 8.4% for the six months ended June 30, 2025, primarily due to lower Lease Charge-Offs (LCOs) Mexico Segment Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $37,751 | $41,435 | $(3,684) | (8.9)% | | Gross profit | $26,971 | $29,727 | $(2,756) | (9.3)% | | Operating profit | $3,159 | $3,255 | $(96) | (2.9)% | - Revenues were negatively impacted by exchange rate fluctuations of approximately **$6.3 million** for the six months ended June 30, 2025. On a constant currency basis, revenues increased by **$2.6 million**[197](index=197&type=chunk) - Operating profit margin increased to **8.4%** for the six months ended June 30, 2025, from **7.9%** in 2024, primarily due to lower LCOs[199](index=199&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) For the six months ended June 30, 2025, the company generated $145.6 million in operating cash flow, significantly higher than the prior year, primarily due to the Brigit acquisition and improved working capital management. Cash used in investing activities increased substantially to $304.9 million due to the Brigit acquisition, while financing activities provided $204.6 million, driven by increased debt proceeds. The company ended the period with $106.8 million in cash and $1.6 billion in outstanding indebtedness - Operating cash flow increased by **$85.1 million** to **$145.6 million** for the six months ended June 30, 2025, driven by the Brigit acquisition and timing of vendor payments[201](index=201&type=chunk) - Cash used in investing activities increased by **$278.8 million** to **$304.9 million**, primarily due to the **$275.9 million** cash consideration for the Brigit acquisition[202](index=202&type=chunk) - Cash provided by financing activities increased by **$248.9 million** to **$204.6 million**, mainly due to **$549.0 million** in proceeds from debt, primarily from the ABL Credit Facility[204](index=204&type=chunk) - As of June 30, 2025, the company had **$106.8 million** in cash and cash equivalents and **$1.6 billion** in outstanding indebtedness[200](index=200&type=chunk) - The company believes cash flow from operations and available ABL Credit Facility will be sufficient for the next twelve months[206](index=206&type=chunk) [Seasonality](index=41&type=section&id=Seasonality) The company's revenue mix is moderately seasonal, with the first quarter typically showing higher sales due to federal income tax refunds, leading to more early purchase options and merchandise sales. Conversely, cash expenditures for merchandise purchases are generally highest from the latter part of the third quarter through the fourth quarter due to holiday promotions - Revenue is moderately seasonal, with Q1 generally having higher sales due to federal income tax refunds, leading to more early purchase options[220](index=220&type=chunk) - Cash expenditures for merchandise purchases are highest in Q3 and Q4 due to holiday promotions and increased demand[220](index=220&type=chunk) [Recently Issued Accounting Pronouncements](index=41&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) The FASB issued ASU 2024-03 (Expense Disaggregation Disclosures) in November 2024, requiring new tabular disclosures for income statement expenses, with an effective date for annual periods beginning after December 15, 2026. The company is currently assessing its impact - FASB issued ASU 2024-03, requiring new tabular disclosures for income statement expenses[221](index=221&type=chunk) - The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027[221](index=221&type=chunk) - The company is in preliminary stages of assessing the impact of ASU 2024-03[221](index=221&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations, which it manages through ongoing assessment. As of June 30, 2025, a hypothetical 1.0% change in market interest rates would result in an $11.3 million annualized pre-tax charge or credit, given its $798.0 million Term Loan Facility and $334.0 million ABL Credit Facility at variable rates, alongside $450 million in fixed-rate senior notes. The company is also exposed to foreign currency translation risk from its Mexico operations - Primary market risk exposure is fluctuations in interest rates, managed through ongoing assessment[223](index=223&type=chunk) - A hypothetical **1.0%** increase or decrease in market interest rates would result in an **$11.3 million** annualized pre-tax charge or credit[224](index=224&type=chunk) - The company has **$450 million** in fixed-rate senior notes and **$1,132 million** in variable-rate debt (Term Loan Facility and ABL Credit Facility)[224](index=224&type=chunk) - Exposure to foreign currency translation risk exists due to Mexican peso fluctuations[225](index=225&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective. The assessment of internal control over financial reporting for the newly acquired Brigit segment is currently in progress and was excluded from the June 30, 2025, evaluation. No material changes to internal controls over financial reporting occurred during the quarter - Disclosure controls and procedures were effective as of June 30, 2025[226](index=226&type=chunk) - The assessment of internal control over financial reporting for the Brigit acquisition (January 31, 2025) is ongoing and was excluded from the June 30, 2025, evaluation[227](index=227&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[228](index=228&type=chunk) Part II. Other Information [Part II. Other Information](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including details on legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and a list of exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and governmental inquiries, some of which could materially impact results. Reserves are established when losses are probable and estimable, and further details are in Note 12 - The company is party to various legal proceedings and governmental inquiries, some of which could have a material adverse impact on results[229](index=229&type=chunk)[230](index=230&type=chunk) - Reserves are established when losses are probable and reasonably estimable, but no assurance is given that reserves will cover the full amount of loss[230](index=230&type=chunk) - Further details on legal proceedings are provided in Note 12 to the condensed consolidated financial statements[231](index=231&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in Item 1A of Part 1 of the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors since the Annual Report on Form 10-K for the year ended December 31, 2024[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[233](index=233&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[234](index=234&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[235](index=235&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section notes that certain officers may participate in the company's stock investment option and dividend reinvestment through the 401(k) plan, or make elections for shares to cover tax withholdings or reinvest dividends, potentially under Rule 10b5-1 or as "non-Rule 10b5-1 trading arrangements." - Officers may participate in stock investment/dividend reinvestment plans or make elections for tax withholdings on awards[236](index=236&type=chunk) - Such arrangements may be intended to satisfy Rule 10b5-1 conditions or constitute "non-Rule 10b5-1 trading arrangements"[236](index=236&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, indenture, certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and XBRL interactive data files - Exhibits include corporate governance documents (Restated Certificate of Incorporation, Amended and Restated Bylaws), a description of common stock, and the Indenture for Senior Unsecured Notes[237](index=237&type=chunk)[238](index=238&type=chunk) - Certifications pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350 are filed, along with XBRL interactive data files[238](index=238&type=chunk) Signatures [Signatures](index=45&type=section&id=SIGNATURES) This section contains the signature of Fahmi W. Karam, Chief Executive Officer and Chief Financial Officer of Upbound Group, Inc., certifying the report on July 31, 2025 - The report is signed by Fahmi W. Karam, Chief Executive Officer and Chief Financial Officer of Upbound Group, Inc[241](index=241&type=chunk) - The report was signed on July 31, 2025[241](index=241&type=chunk)

Core Insights - Upbound Group (UPBD) reported $1.16 billion in revenue for Q2 2025, a year-over-year increase of 7.5% and an EPS of $1.12, up from $1.04 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $1.14 billion, resulting in a surprise of +1.28%, while the EPS also surpassed expectations by +6.67% [1] Revenue Breakdown - Subscriptions and fees generated $51.89 million, exceeding the average estimate of $49.82 million from three analysts [4] - Revenues from Brigit were $51.89 million, aligning with the average estimate of $49.82 million [4] - Other revenues reached $8.85 million, surpassing the average estimate of $8.58 million, marking a +372% year-over-year change [4] - Store revenues from merchandise sales were $192.22 million, below the average estimate of $208.92 million, reflecting a +31.4% year-over-year increase [4] - Store revenues from rentals and fees amounted to $904.58 million, exceeding the average estimate of $887.65 million, with a +2.1% change compared to the previous year [4] Stock Performance - Over the past month, shares of Upbound Group have returned -7.4%, contrasting with the Zacks S&P 500 composite's +2.7% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Data and Key Metrics Changes - Upbound Group reported second quarter revenue of $1,160,000,000, a 7.5% increase year-over-year, driven by strength at Asima and the addition of Bridget [13][15] - Adjusted EBITDA for the quarter was $133,000,000, reflecting a 7% increase compared to the same period last year, with an adjusted EBITDA margin of 11.5% [13][14] - Non-GAAP diluted EPS was $1.12, a 7.7% increase from the previous year, including a $0.25 benefit related to stock-based compensation [14][15] Business Line Data and Key Metrics Changes - Asima's GMV grew 16% year-over-year, marking its seventh consecutive quarter of growth, with segment revenue increasing by 12% and adjusted EBITDA up 15% [8][9][28] - Bridget experienced nearly 40% revenue growth, with a 24% increase in paid subscribers and an adjusted EBITDA margin of nearly 28% [10][31][32] - Rent A Center's revenue declined by 7.1% year-over-year, with same-store sales down 4%, attributed to strategic adjustments made in the previous year [11][33] Market Data and Key Metrics Changes - Asima's GMV from its Marketplace was up over 130% year-over-year, with returning customers now exceeding 40% of GMV [26][27] - The top 10 merchants represented about 31% of total GMV, consistent with previous quarters, indicating a stable merchant base [9][27] - Bridget's cash advance loss rate was 2.6%, reflecting strong product-market fit amid a challenging economic environment [31][32] Company Strategy and Development Direction - The company is focused on digital transformation and expanding financial solutions for underserved consumers, including new products like earned wage access and credit building [5][6] - Investments in marketing and customer acquisition are expected to drive growth, particularly in Bridget, with a focus on innovative product offerings [21][22][59] - The strategic priority includes enhancing digital capabilities and cross-selling opportunities across segments to improve customer engagement and retention [25][37] Management's Comments on Operating Environment and Future Outlook - Management noted that while the core consumer remains resilient, they are facing pressures from inflation and higher prices, leading to a cautious approach in underwriting [16][17][68] - The company anticipates a gradual return to growth in Rent A Center by early 2026 as they lap previous adjustments and improve delivery initiatives [53][86] - Overall, management expressed confidence in the company's ability to navigate economic challenges and leverage growth opportunities across all segments [44][40] Other Important Information - The company recorded a net usage of free cash flow of $10,000,000 in the second quarter, with year-to-date free cash flow at $117,000,000, significantly up from the previous year [14][15] - The company is committed to maintaining a regular dividend of $1.56 per share annually, reflecting a yield of about 6% at current prices [37] - Legal and regulatory matters are being monitored, with an additional accrual of $31,700,000 recorded in the second quarter related to ongoing negotiations [42][43] Q&A Session Summary Question: Impact of adjustments on Rent A Center results - Management acknowledged that purposeful pullbacks in credit and underwriting have impacted revenue and EBITDA, with expectations of normalization in the second half of the year [49][50] Question: Long-term growth potential for Rent A Center - Management indicated that they aim to achieve positive same-store sales by the end of the year and expect low single-digit growth thereafter [53] Question: Marketing investments and new products for Bridget - Management highlighted plans for increased marketing investments and the introduction of a new line of credit product, reflecting consumer demand [58][59] Question: Stability of core customer segments - Management described the core customer base as stable but under pressure from inflation, with a cautious approach to underwriting [66][68] Question: Growth drivers for Asima - Management noted that new merchant onboarding has been a significant driver of growth, with a focus on expanding the direct-to-consumer channel [73][74]

Core Viewpoint - Upbound Group reported quarterly earnings of $1.12 per share, exceeding the Zacks Consensus Estimate of $1.05 per share, and showing an increase from $1.04 per share a year ago [1][2] Financial Performance - The company achieved revenues of $1.16 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.28%, compared to $1.08 billion in the same quarter last year [3] - Upbound Group has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2][3] Stock Performance - The stock has experienced a decline of approximately 16.5% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [4] - The current Zacks Rank for Upbound Group is 2 (Buy), indicating expectations for the stock to outperform the market in the near future [7] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $1.03 on revenues of $1.17 billion, and for the current fiscal year, it is $4.18 on revenues of $4.66 billion [8] - The trend of estimate revisions for Upbound Group was favorable prior to the earnings release, suggesting potential positive movements in stock performance [6][7] Industry Context - Upbound Group operates within the Financial - Leasing Companies industry, which is currently ranked in the top 1% of over 250 Zacks industries, indicating a strong industry performance [9]